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A BILL TO BE ENTITLED
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AN ACT
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relating to the funding of the Texas Windstorm Insurance |
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Association. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 2210.071, Insurance Code, is amended to |
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read as follows: |
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Sec. 2210.071. PAYMENT OF EXCESS LOSSES. (a) If, in a |
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catastrophe year, an occurrence or series of occurrences in a |
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catastrophe area results in insured losses and operating expenses |
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of the association in excess of premium and other revenue of the |
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association, the excess losses and operating expenses shall be paid |
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as provided by this subchapter. |
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(b) The association may not pay insured losses and operating |
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expenses resulting from an occurrence or series of occurrences in a |
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catastrophe year with premium and other revenue earned in a |
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subsequent year. |
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SECTION 2. Section 2210.0715, Insurance Code, is amended to |
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read as follows: |
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Sec. 2210.0715. PAYMENT FROM RESERVES AND TRUST FUND. (a) |
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The association shall pay losses resulting from an occurrence or |
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series of occurrences in a catastrophe year in excess of premium and |
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other revenue of the association for that catastrophe year from |
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[available] reserves of the association available before or accrued |
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during that catastrophe year and [available] amounts in the |
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catastrophe reserve trust fund available before or accrued during |
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that catastrophe year. |
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(b) Proceeds of [Class 1] public securities issued or |
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assessments made before or as a result [the date] of any occurrence |
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or series of occurrences in a catastrophe year that results in |
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insured losses may not be included in [available] reserves |
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available for a subsequent catastrophe year for purposes of this |
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section. |
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SECTION 3. Subchapter C, Chapter 2210, Insurance Code, is |
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amended by adding Section 2210.1052 to read as follows: |
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Sec. 2210.1052. EMERGENCY MEETING. If the final estimate |
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of losses for an occurrence or series of occurrences made by the |
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chief financial officer or chief actuary of the association |
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indicates member insurers may be subject to an assessment under |
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Subchapter B-1, the board of directors shall call an emergency |
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meeting of the members of the association to notify the members |
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about the assessment. |
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SECTION 4. Section 2210.452, Insurance Code, is amended by |
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amending Subsection (c) and adding Subsection (c-1) to read as |
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follows: |
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(c) In addition to the payment required by Subsection (c-1), |
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at [At] the end of each calendar year or policy year, the |
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association shall use the net gain from operations of the |
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association, including all premium and other revenue of the |
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association in excess of incurred losses, operating expenses, |
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public security obligations, and public security administrative |
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expenses, to make payments to the trust fund, procure reinsurance, |
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or use alternative risk financing mechanisms, or to make payments |
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to the trust fund and procure reinsurance or use alternative risk |
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financing mechanisms. |
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(c-1) The association shall annually pay to the catastrophe |
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reserve trust fund 20 percent of net earned premium of the |
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association. |
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SECTION 5. Subchapter J, Chapter 2210, Insurance Code, is |
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amended by adding Section 2210.4531 to read as follows: |
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Sec. 2210.4531. EXCESS FUNDING IN CERTAIN CIRCUMSTANCES; |
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ASSESSMENTS. (a) The association may only purchase reinsurance or |
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other alternative risk financing mechanisms in excess of the |
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minimum amount required by Section 2210.453(b) if: |
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(1) the balance of the catastrophe reserve trust fund |
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is less than an amount specified by the commissioner by rule; and |
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(2) the members of the association pay for the |
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reinsurance or risk financing mechanism through assessments or |
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otherwise. |
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(b) The proportion of the amount described by Subsection |
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(a)(2) allocable to each insurer under this section shall be |
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determined in the manner used to determine each insurer's |
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participation in the association for the year under Section |
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2210.052. |
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SECTION 6. As soon as practicable after the effective date |
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of this Act, the Texas Windstorm Insurance Association, through the |
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board of directors of that association, shall propose to the |
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commissioner of insurance amendments to the association's plan of |
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operation as necessary under Chapter 2210, Insurance Code, as |
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amended by this Act. |
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SECTION 7. This Act takes effect September 1, 2019. |